Special body to raise funds for infra projects, 61% more funds for roads, new airports and rail corridors made up most of state budget announcements

State Finance Minister Sudhir Mungantiwar (right) and MoS Deepak Kesarkar before presenting the state budget on Saturday.(Anshuman Poyrekar/HT Photo)

It’s spotlight infrastructure for the BJP-led state government. Finance minister Sudhir Mungantiwar on Saturday announced the state will set up a special body to raise funds for infrastructure projects. He also hiked funds allotted for road development by 61%

Called MahaInfra, the special purpose vehicle will raise funds and finance capital expenditure for key projects, Mungantiwar said while presenting the budget for 2017-18. “In the next five years, we see a requirement of Rs1 lakh crore to finance capital expenditure of key infrastructure projects. Given the constraints of raising such huge amounts from the available sources of funds using traditional methods, there is a need to look at alternative ways.” The special purpose vehicle will take care of aggregating government land held by various departments and securitising or monetising it to ensure a constant flow of funds to the state. The proposed body will collect land that has not been in use or is not likely to be developed for the next 10 years by the department holding it. “This kind of land securitisation will help raise funds through low-cost loans, bonds, and investments with a long-term horizon like national or global pension and insurance funds,” he said.

The state is also considering converting Mahainfra into a Non-Banking Financial Company (NBFC), on the lines of Gujarat State Financial Services Ltd. This means all state agencies, such as Mumbai Metropolitan Region Development Authority, CIDCO and Maharashtra Industrial Development Corporation — all flush with fixed deposits — can keep its funds with Mahainfra.

“By setting up an NBFC, we can keep fixed deposits of public companies and corporations with us, to raise resources. We will pay them interests, like any other bank. If they can trust a bank, why not the state?” Mungantiwar said. He had told HT the issue was discussed with the CM and he plans to visit Gujarat to understand how a state NBFC works.

After facing flak for the poor roads, particularly in the capital Mumbai, the budget proposes Rs7,000 crore to improve roads. This figure was Rs4,347 crore in 2016-17. The state said to ensure quality of work and better supervision, work will be done only in small packages of 10km. The state’s target is to complete 10,000km of roads in two years under the newly-adopted hybrid annuity model, yet another way in which the government proposes to preserve its funds. Under the hybrid annuity model, 195 works costing Rs30,000 crore have been proposed. This model lies between a public private partnership contract and an engineering procurement contract, but is designed in such a way that the burden on the government is considerably lower. In this model, the government will put in a maximum of 40% of the funds, while the contractor contributes the rest and will recover its investment over 15-20 years through instalments from the government. For the upcoming fiscal, the state has proposed to allocate Rs3,500 crore for projects under this model. For rural roads, the state has proposed Rs1,630 crore under the Chief Minister Gram Sadak Yojana.

Three railway projects — connecting Ahmednagar-Beed-Parli-Vaijnath, Wardha-Yavatmal-Nanded and Wadsa-Desiganj-Gadchiroli — will be implemented by the state with the railways, and for this, Rs150 crore has been provided. For airports at Shirdi, Solapur, Karad, Amravati and Chandrapur, the budget allocated Rs50 crore in 2017-18.